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Medical Bills and Liens
Problems with Bills and Liens
One of the most frustrating aspects of a personal injury case for us and our clients can be medical liens and bills. The Nevada State Bar insists that if a lawyer uses medical bills to negotiate a settlement or obtain a judgment, the lawyer has a duty to pay or to take care of those bills at settlement time. Taking care of the bills means paying the bills in full, or getting the lien holder to agree to a reduced amount to be paid out of the settlement, or initiating a court proceeding to determine that the bills are unreasonable if the parties can't resolve the amount to be paid.
We often get calls from clients of other lawyers complaining that the lawyer settled their case but they haven't been paid because of lien issues. Sometimes the lawyer is at fault for not resolving the issues more quickly and in very rare cases the lawyer is at fault for stealing the money. However, in many cases the lawyer is not at fault and the lien issue will take a while to resolved. It is appropriate to describe the problems.
Because of the ongoing battles between health care providers and insurance companies, medical bills are generally puffed up by the providers and then chopped down by the insurance companies.
Unfortunately, not everyone can get their medical bills reduced. For example, University Medical Center in Las Vegas will give a 50% discount to Clark County residents without insurance. BUT, University Medical Center will not give that discount to people who have a personal injury claim even if they don't have medical insurance. Such people are "insured" according to University Medical Center. (IF YOU HAPPEN TO BE A JUROR ON A PERSONAL INJURY CASE RESEARCHING MEDICAL BILLS ON THE NET--WHICH YOU ARE NOT SUPPOSED TO BE DOING--YOU CANNOT ASSUME THAT ANY MEDICAL BILL WILL BE REDUCED. FOLLOW THE JUDGE'S INSTRUCTIONS.)
(BY THE WAY, THE HEALTH INSURANCE COMPANY WHICH PAYS MEDICAL BILLS RESULTING FROM A PERSONAL INJURY CLAIM, IN THE HUGE MAJORITY OF CASES HAS THE RIGHT TO GET PAID BACK OUT OF THE SETTLEMENT.)
At Las Vegas Hospitals the emergency room doctors are independent contractors. Typically they belong to large practice groups that refuse to offer any discounts to uninsured patients. From a negotiating standpoint the emergency room doctor's service knows that probably the emergency room doctor's bill is not the major part of the medical bills so their refusal to negotiate is probably not going to make or break a settlement deal. And patients don't pick their emergency room doctors so there is no economic incentive for an emergency room practice to keep its patients happy. Likewise, the radiologists at the hospital who reads the x-rays or MRIs also refuse to negotiate.
Privately owned "major" hospitals, unlike University Medical Center which is operated by Clark County, are required by law to give a 30% discount to uninsured patients and the Nevada Supreme Court has said that in their case this discount will apply to uninsured people who have a personal injury claim. Still, this is only a 30% discount off a totally arbitrary amount. Most of the time insurance companies get a much larger discount. But not always. For example, Kaiser Permanente was founded in 1945 in California and is the largest managed care organization in the U.S. with almost 9 million members and plans in the 9 states and the District of Columbia. You would think that they would have the clout to get good discounts. But not in Nevada. When we represented a husband and wife with Kaiser coverage for a Las Vegas motor vehicle collision we found out that Kaiser was not able to do much in the way of discounting the Las Vegas hospital bills. Of course, had the hospital visits been in California, Kaiser would have gotten much better discounts.
Ambulance bills, whether for road transport or air transport are often not reducible by major insurance companies that can get significant reductions from other health care providers such as hospitals and doctors.
If there are many different health care providers who have a lien it is often very hard to negotiate reductions because, for example, 5 of 6 providers might agree to the same percentage cut to make a settlement work, but one provider may hold out for more and then the other providers don't want to take a bigger cut than some other provider and it gets very difficult.
Not only is the problem that some lien holders simply refuse to give a discount off an inflated bill, but sometimes it is hard to even talk to them. For example, most Las Vegas emergency room doctor practices bill from out an out of state billing office. Just to find out if a bill has been paid, they demand a HIPPA medical authorization from the client. So we fax an authorization. Then we are told that it can take two weeks for the authorization to get into their system. But even if we are patient and play their game, the emergency room doctors' billing services refuse to offer a discount unless we have a valid legal argument that their bill is or may be invalid, for example, they should have timely billed the patient's insurance and did not.
Medicare can be a nightmare to deal with. They want to see a settlement before they will tell you what lien reduction, if any, they will give. This is mitigated somewhat by standard formulas they use so the lawyer can in some cases calculate what reduction if any they give. BUT, if there are causation issues as to whether this bill and that bill related to the personal injury claim, then the whole process become subjective.
Because the Medicare lien does not get resolved until after the settlement, an attorney has to hold back money from a settlement sufficient to take of Medicare. Because Medicare can take so long to respond, some clients may think their attorney is cheating them unless the lawyer takes the time to explain the whole process before the client agrees to the settlement. Often clients complain on online forums such as www.avvo.com about a lawyer who is "unreasonably" holding back settlement money pending lien resolutions. One lawyer on www.avvo.com answers many questions with the reply that the client's lawyer should settle the medical liens on pennies on the dollar. This is generally unrealistic. The best tool the lawyer has for a lien reduction is the threat that without the lien reduction, the settlement won't happen and no one will get paid. Medicare is too clumsy and encumbered by federal law and regulations to respond to that sort of argument, although it does have its own formulas for lien reduction. Sometimes Medicare liens can get resolved more quickly if the client and the attorney offer Medicare a specific dollar amount.
Nevada Medicaid is fortunately much quicker to respond and easier to talk to. However, depending on the settlement facts Nevada Medicaid may or may not agree to a lien reduction. Typically, Nevada Medicaid will refuse to reduce their lien by any amount unless their refusal to do so would really make the settlement unattractive to the client such that there would be no settlement. NOTE: Nevada Medicaid, unlike Medicare, claim a right to take from the patient's estate when they die, re-imbursement for all Medicaid benefits they received during their lifetime. This is not an issue in a personal injury case unless the injury results in death.
Some health care providers, when asked for a lien reduction come back to the lawyer and say, "So, Mr. Lawyer, you are asking me to reduce my fee. Are you reducing your fee?" We offer a reduced 25% contingent fee (instead of 33% or 35% or 40% or 45%) in cases in which there is a police report blaming the other side and not our client, or where it is obvious that our client was not at fault because our client was a passenger or a driver who was stopped at a red light and got rear-ended, Low Fee Some Car Accidents, and this gives us credibility in those cases asking the health care provider for a lien reduction.
Some lawyers provide in their retainer agreements that they will get a percentage of any lien reduction as an additional fee. We never charge for getting lien reductions for our clients.
Since we live in a country where people generally pay set prices (rather than bargained for prices) for much of what they buy, we would like to think that there is an objective standard as to what is a reasonable medical bill. The fact is medical bills are very arbitrary and different people getting exactly the same service from the same health care provider may pay very different amounts. When you go shopping for food at Vons no one expects to bargain with the check out cashier over the prices. A "smart" customer might pay $24,000 for a certain type of new Ford car whereas a "dummy" might pay $27,500 for the same car. But even in this example, the price difference is slightly less than 15%. Two equally smart and careful people might have to pay hugely different prices for a health care service for reasons they can not control at the time they need the service. For example, if two people go the emergency room as outpatients, the emergency room doctor might bill each $1,000, but accept less than $100 in insurance payments and co-pays from one patient while demanding that the uninsured patient pay the full amount or have the matter turned over to a credit collection agency.
SPECIAL LIEN PROBLEMS IN ARIZONA:
In Arizona health care providers have special privileges to charge more in personal injury claims or lawsuits. Ordinarily, there are two advantages to having health insurance. The first is the obvious benefit that most of your bill gets paid by the insurer. The second is that the insurer negotiates charges down. Unfortunately, under A.R.S. 33-932 the Plaintiff in a personal injury claim or lawsuit can lose this second benefit. Let's say an Arizona hospital bills the patient $10,000 before any reduction. The patient, who was hurt in a car wreck, has Blue Cross/Blue Shield health insurance which chops this bill to $4,000. Now if the patient was at fault for the wreck or loses his case, the hospital is stuck with the bill being reduced to $4,000. But if the patient recovers from the other driver or person at fault for the patient's injury, the Arizona hospital now says, "Thank you for the $4,000 payment, but you also us the additional $6,000."
All Arizona health providers can take advantage of this special benefit to them if they file a lien within 30 days of treatment in the county in which the treatment was given. For hospitals and ambulance companies the deadline for filing a lien to take advantage of this is extended to 30 days before settlement provided that the lien is filed in a county in which liens are searchable online. This is the case in Maricopa County, Arizona's most populous county which includes Phoenix
Who Pays the Bills?
Occasionally we get auto collision clients who insist that the at-fault driver's insurance should pay for their medical expenses as incurred. This is an unrealistic expectation. The only thing you the auto victim has that the at-fault driver's insurance company wants is a complete release. As a general rule, the at-fault driver's insurance will only make a final settlement; it will not pay your medical expense as they are incurred. (Very, very rarely we can talk the adverse driver's insurance company into advancing some money for medical expenses if liability is clear and if there is a convincing case that if this money is not advanced, the client's medical condition will seriously worsen thereby increasing the size of the claim. For example, a woman's silicone breast implant bursts in the auto collision and she doesn't have health insurance to remedy the problem.)
If our client has health insurance there is often a choice of having their health insurance pay for treatment versus getting treatment on a lien basis.
Many doctors sign contracts with big insurance or HMO (Health Maintenance Organizations) operations such as Health Plan of Nevada (HPN). Under these contracts the doctors get a large number of patients which is good for business, but agree to very low fees which is bad for business. If the doctor learns that the patient has a personal injury claim the doctor may pressure the patient to have their attorney sign a lien for their treatment and that way the doctor in the end gets paid a much higher fee. We see this most often with chiropractors and orthopedic surgeons. As a general rule with the orthopedic surgeons it is to the patient/client's advantage to treat through HPN. This is because HPN will pay a much reduced fee and then HPN will give us a further discount when we need to pay them back out of the settlement. Ditto for pain management specialists. With respect to chiropractors it is often easier to get the patient in quickly on a lien basis and most chiropractors are pretty reasonable about giving lien reductions if needed.
Although sometimes it is in the patient's interest to use health care coverage for auto collision injuries, especially with respect to high billing specialist doctors, getting treated for auto collision injuries can sometimes be very inconvenient. First, some doctors will refuse to treat accident victims because they are afraid of getting dragged into court to testify. Second, many doctors are employees of large medical practices managed by business people who force the doctor employees to see more patients per day than the doctors are comfortable with. The business managers, if asked, would blame the health insurance companies for keeping payments too low. And, indeed, the reason these doctors are working for a large practice is that they found dealing with health insurance companies on their own too burdensome. So, some doctors set up a a "concierge" practice in which they expect wealthy patients to pay out of their own pocket for attentive service. Other doctors, to avoid what they see as the tyranny of health insurance companies fighting them over every bill, specialize in treating accident victims on a lien basis. So, it becomes a judgment call between lawyer and client, if the client has health insurance, whether to have the client treated on a lien basis or whether to have the client treat through their health insurance.
Finally, we sometimes have clients whose health insurance is not commonly used in Nevada. For example, a California resident client has their health insurance through Kaiser Permanente, one of the country's original HMOs. As in any HMO, the client is supposed to go to the HMO providers. But if a California resident needs to go the ER in Las Vegas because of a car collision, either the ER is not in the Kaiser system or because it was an emergency the patient wasn't able to research the situation. In such cases, even the hospital may refuse to bill Kaiser. However, in that case, the patient can go to Kaiser's website and obtain forms to have Kaiser pay the bill or to reimburse the patient if the patient already paid. At least that is the way it is supposed to work. We have found that Kaiser insured patients visiting Nevada emergency rooms face a paperwork nightmare along with the fact that Kaiser is not able to get much of a discount from Nevada health care providers.
What About Medical Payments Coverage on the Client's Auto Policy?
Some of our clients have $1,000, or $2,000, or $5,000, or even more in no fault medical payments coverage on their own auto insurance policy, although unfortunately, $1,000 is the most common limit. If the client is hurt in an auto collision caused by their own fault, of course, this pays their bills up to the coverage limit. If the client is hurt in a collision caused by another driver, this medical payments coverage helps them recover more money. For example, client A does not have med pay coverage, has $5000 in chiropractic treatment and the settlement is $15,000. This client was treated on a lien basis. The chiropractor gets $5,000 of the settlement, usually the lawyer gets $5,000 and the client gets $5,000. (BUT IF THE CLIENT HIRED US AND THE POLICE REPORT BLAMED THE OTHER DRIVER WE WOULD ONLY CHARGE THE CLIENT 25% OR $3,750 AND THE CLIENT WOULD GET $6,250.) Low Fee for Favorable Police Report Cases
Now, consider Client B, same facts but the client has $5,000 med pay coverage. Now the chiropractor gets paid by the med pay, most lawyers take a fee of $5,000 or more leaving the client $10,000 or less, but WE WOULD TAKE A FEE OF $3,750, ASSUMING A FAVORABLE POLICE REPORT, ALLOWING THE CLIENT TO NET $11,250.) Low Fee for Favorable Police Report Cases
PLEASE NOTE: MANY CLIENTS WHEN WE ASK IF THEY HAVE MED PAY COVERAGE SAY, "I HAVE FULL COVERAGE." MOST PEOPLE HAVE NO IDEA WHAT THIS MEANS--I SUPPOSE IT MEANS THEY HAVE EVERY TYPE OF COVERAGE THE INSURANCE COMPANY OFFERS--AND OFTEN THE PERSON WITH "FULL" COVERAGE DOES NOT HAVE MED PAY COVERAAGE.
How We Like to Handle Med Pay
If the client has med pay coverage the limit is usually much less than the total medical bills because most med pay coverage has very low limits. Although in very rare instances a client may have a large amount of med pay, the most typical amount we see are $1,000, $2,000 and $5,000 with the $1,000 being the most common amount. We don't want to see the first health care providers use up the med pay and get paid at 100% of their bills until the med pay is used up. Instead we ask the med pay carrier to not pay anything without our authorization. Often, once we have medical bills in excess of the med pay limits we can have the med pay insurance paid into our trust account. If there is health insurance we submit the bills to the health insurance company. Then at settlement time the med pay money is extra money that is credited to the client.
We believe health care providers are entitled to be compensated fairly for their highly skilled professional work which is sometimes life-saving. Unfortunately, the way the modern American medical system works is that many medical bills are highly inflated as doctors and insurance companies do battle with each other. For example, one time I asked an orthopedic surgeon in a formal proceeding if the bills he submitted for doing surgery on my client were "fair and reasonable?" The doctor laughed and said, "My office makes the bills as high as they can; the insurance company chops the bills as much as they can; I accept what I get paid and try not to get upset." As we point out in the box above this, sometimes our clients, if they have health insurance, get these bills paid at a big discount, but in other cases, even if they have insurance, the bills are paid in full or almost in full. And most of the time the health insurance company that paid the bills for the car wreck has a right to get paid back out of the settlement.